Nearly a decade after the Great Recession, U.S. housing markets show signs of two very different problems. Metropolitan areas along the Northeast and West Coasts are building relatively little new housing and have seen sharp price increases, due to tight local land useregulations. Older industrial cities, particularly around the Great Lakes, and many small Heartland communities have the reverse problem: too much housing, leading to high vacancy rates, long-term price declines, and neighborhood blight. But in other parts of the country, particularly metropolitan areas in the South and Southwest, housing markets are closer to the elusive “just right,” achieving a better balance between housing supply and demand.

In this analysis, I explore why housing markets are prone to supply-demand imbalances, and investigate how well housing supply has matched housing demand in several metropolitan areas over the past 70 years.

Housing markets have unique features that can lead to supply-demand imbalances.

In a market economy like the U.S., we typically do not expect long-lasting shortages for any particular good or service. When consumer demand increases for cars or haircuts, for example, the price of those goods will increase, leading automakers to increase production or barbers to add more chairs. But housing markets have several distinctive features that make them more prone to supply imbalances.

Both demand and supply of housing are highly localized.

People choose to live in a particular city or neighborhood because of proximity to their job, social networks, the quality of local public schools, and other location-specific amenities. Unlike cars, an oversupply of houses in one city cannot be loaded onto a flatbed truck and shipped to a local market with too few houses. (Structures can be relocated, but the host city still needs to provide land.) People can and do move from places with high prices and tight supply to places with lower prices, but the financial, professional, and emotional costs of moving are quite high.

All changes to supply require explicit approval from local government.

Ford and GM do not require sign-off from government agencies to increase the number of cars their factories produce. But when developers or landowners want to build new houses—whether an owner-occupant on a single lot, 500 unit subdivision on farmland, or a new apartment building on an empty parking lot—they must obtain permission from the local government. Local governments also have to grant permission to reduce supply by tearing down vacant houses or converting them into other uses. Policymakers may have incentives for limiting housing growth—often at the direct request of constituents who protest changes in their backyards—that may impede the response of landowners, developers, homebuyers, and renters. The complex network of regulations that governs new housing development not only increases the cost of housing, but can inhibit supply from responding to changes in demand.

Measuring supply imbalances: housing growth versus household growth

How do markets with housing supply imbalances—both too much and too little housing—compare to balanced housing markets? For this analysis, I define “balanced markets” as metropolitan areas that have consistently positive population growth, providing demand for additional housing, and where local government regulation does not unduly constrain development. Housing markets with excess housing supply are generally places that have experienced large-scale population losses: housing stock was built to support more households than currently live there. Metro areas where local governments restrict the development of new housing, despite strong population and/or income growth, are prone to an undersupply of housing.

The analysis focuses on three metropolitan areas, each of which represents a different market reality: too little, too much, or just right. San Francisco is the quintessential undersupplied housing market: it has some of the most restrictiveland use regulations in the country, along with very strong housing demand. St. Louis is typical of older industrial cities that built housing for peak populations in the mid-20th century, but their central cities have since lost a large fraction of population. Nashville-Davidson, Tenn. represents a balanced housing market. Since 1940, both Nashville’s central city and suburban counties have experienced consistent population growth, and the metro area has few regulatory or geographic barriers to development.

Growth in population size does not translate one-for-one into demand for additional housing; for instance, newborn children do not require separate housing from their parents. Rather, additional housing demand reflects growth in the number of households, such as young adults moving out of homes shared with parents and roommates, or newly arrived families moving into a metropolitan area. Household formation rates and household size at the local level depend on housing costs and availability. Therefore I estimate county-level housing demand by dividing county population numbers by the average U.S. household size in each year.1 To measure the balance between housing supply and demand, I compare county-level changes in the number of housing units to changes in the estimated number of households from 1940 to 2010.2 County-level decennial census data comes from the National Historical Geographic Information System (NHGIS).

Supply imbalances are regional and local, not national

Across all metropolitan counties, housing supply grew slightly faster than the number of households from 1940 to 2010 (Figure 1). Household growth rates declined over the 20th century, due mostly to declining birth rates following the post-WWII baby boom. Housing growth declined somewhat more gradually, so that on average, increases to housing supply slightly exceeded household growth.

The gap between housing and household growth rates is more pronounced at the regional level. Households and housing supply grew much faster in the South and West than in the Northeast and Midwest from 1940 to 2010 (Figure 2), confirming the general shift of U.S. population towards the Sunbelt. In the Northeast, the two lines are parallel and almost perfectly aligned, suggesting that housing supply kept pace with modest rates of household growth. In the Midwest, household growth was slower than housing growth after 1980, a sign of possible excess housing supply. The South built housing significantly faster than household growth from 1940 until about 1980, with smaller margins thereafter. In the West, housing supply grew by less than estimated household growth during the entire study period—an indication of potential undersupply.

Besides population movements toward the Sunbelt, the study period coincides with a general population shift from central cities to suburban areas. Household and housing growth rates were consistently higher in suburban and exurban counties than in central counties (Figure 3). Moreover, the margin of excess housing varies across these three county groups. In central counties, housing supply moved parallel to, and slightly exceeded, household growth, with relatively consistent margins. Housing supply growth in the suburbs greatly exceeded household growth from 1940 to about 1990, after which point household growth exceeds supply growth.

St. Louis and San Francisco could learn from Nashville’s “just right” housing supply

Nashville represents a relatively small group of metropolitan areas with strong but not overheated housing markets. From 1940 through 2010, both the central city and most suburban counties experienced positive household growth (Figure 3). This is an anomaly compared to the decline of most central cities during the study period, and may be partly due to the 1962 merger between the city of Nashville and surrounding Davidson County. Housing supply grew somewhat faster than households in Nashville’s center, while housing supply tracked household growth closely in suburban and exurban counties. This implies that the region likely had sufficient supply to accommodate growth, while not generating excess housing that would stand vacant.

St. Louis offers a classic example of population and housing changes underway in older industrial cities during the study period. Households in the central city declined from 1950 through 2010, as many households left for suburban and exurban neighborhoods. Housing supply in St. Louis City also declined during most of the period, meaning that existing housing units were demolished. This is highly unusual: Even among counties that lost households, nearly 80 percent saw increases in housing supply. The graph shows that household declines exceeded housing declines, leaving St. Louis with excess housing—more than 30,000 units, or 19 percent of its stock—as of 2010. Suburban and exurban counties in the St. Louis metro area gained households more rapidly than housing until about 1980. For the last several decades, the inner ring suburbs around St. Louis have also seen nearly flat household growth, while housing supply continued to increase.

San Francisco’s household and housing growth trends are nearly the opposite of those in St. Louis: household growth exceeds housing supply growth in most counties for most of the study period. Household growth in the central city was positive but modest, while suburban and exurban counties initially matched the region’s high household growth rates. Although housing supply grew rapidly outside the center through about 1980, housing supply in San Francisco’s suburbs has grown much more slowly in recent decades than in Nashville’s suburbs. The graph shows estimated household growth exceeding housing supply growth; the classic definition of a situation predicted to drive up housing prices.

The analysis estimates household growth by dividing population by the U.S. average household size. In practice, too little housing supply (and high housing costs) can reduce household growth in several ways. Young adults delay forming independent households, separate from family. Individuals and families double up, sharing housing with others. And in the worst instance, people become homeless—a perennial problem in the Bay Area.

How can researchers and policymakers move housing markets closer to “just right”?

Supply imbalances have not corrected themselves.

In general, economists expect prices to bring about equilibrium. But the persistence of housing supply imbalances in San Francisco and St. Louis suggest that the combination of unique housing market features and supply regulation can inhibit equilibrium, even over several decades of supply-demand imbalances. Given how many metropolitan areas fall into the undersupply or oversupply buckets, it appears that well-functioning regional housing markets like Nashville may be the exception, rather than the rule. Acknowledging that imbalances will not self-correct is the first step to developing appropriate policy solutions.

Local government regulation of housing production can harm regional economic well-being.

Fragmented local regulation of housing markets can damage well-being not only for individual families, but for the larger region. The Bay Area’s high housing costs make it difficult for firms trying to retain workers and reduce the state’s overall productivity. Conversely, the ease of developing suburban greenfield housing, even as vacancy rates in the center city increase, has hurt cities across the Northeast and Midwest. If fragmented local governance leads to poor outcomes for regions, then state governments should intervene to override narrow parochial interests of local governments (and their NIMBY residents).

We need a better understanding of well-functioning housing markets

Researchers have tended to focus on troubled housing markets, those exhibiting both undersupply and oversupply, while largely ignoring markets in equilibrium. Understanding the political economy of these markets—why some local governments in growing regions support rather than oppose new housing development—is a critical area for future research. Learning how markets like Nashville have achieved better balance between supply and demand may yield insights into how to help less balanced regions.

Thanks to Cecile Murray and Rehan Hasan for excellent research assistance.

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https://www.brookings.edu/wp-content/uploads/2018/12/2018.12.07_Metro_Schuetz_Housing-supply_Related.jpg?w=270By Jenny Schuetz
Nearly a decade after the Great Recession, U.S. housing markets show signs of two very different problems. Metropolitan areas along the Northeast and West Coasts are building relatively little new housing and have seen sharp price increases, due to tight local land use regulations. Older industrial cities, particularly around the Great Lakes, and many small Heartland communities have the reverse problem: too much housing, leading to high vacancy rates, long-term price declines, and neighborhood blight. But in other parts of the country, particularly metropolitan areas in the South and Southwest, housing markets are closer to the elusive “just right,” achieving a better balance between housing supply and demand.
In this analysis, I explore why housing markets are prone to supply-demand imbalances, and investigate how well housing supply has matched housing demand in several metropolitan areas over the past 70 years.
Housing markets have unique features that can lead to supply-demand imbalances.
In a market economy like the U.S., we typically do not expect long-lasting shortages for any particular good or service. When consumer demand increases for cars or haircuts, for example, the price of those goods will increase, leading automakers to increase production or barbers to add more chairs. But housing markets have several distinctive features that make them more prone to supply imbalances.
Housing supply adjusts slowly over time.
When housing demand contracts—for instance, due to population or income decline—existing houses do not cease to exist. The durability of buildings can lead to oversupply, resulting in vacant houses. Similarly, developing new homes also takes time, up to several years for large or complex projects, so home builders cannot instantly ramp up production to meet increased demand.
Both demand and supply of housing are highly localized.
People choose to live in a particular city or neighborhood because of proximity to their job, social networks, the quality of local public schools, and other location-specific amenities. Unlike cars, an oversupply of houses in one city cannot be loaded onto a flatbed truck and shipped to a local market with too few houses. (Structures can be relocated, but the host city still needs to provide land.) People can and do move from places with high prices and tight supply to places with lower prices, but the financial, professional, and emotional costs of moving are quite high.
All changes to supply require explicit approval from local government.
Ford and GM do not require sign-off from government agencies to increase the number of cars their factories produce. But when developers or landowners want to build new houses—whether an owner-occupant on a single lot, 500 unit subdivision on farmland, or a new apartment building on an empty parking lot—they must obtain permission from the local government. Local governments also have to grant permission to reduce supply by tearing down vacant houses or converting them into other uses. Policymakers may have incentives for limiting housing growth—often at the direct request of constituents who protest changes in their backyards—that may impede the response of landowners, developers, homebuyers, and renters. The complex network of regulations that governs new housing development not only increases the cost of housing, but can inhibit supply from responding to changes in demand.
Measuring supply imbalances: housing growth versus household growth
How do markets with housing supply imbalances—both too much and too little housing—compare to balanced housing markets? For this analysis, I define “balanced markets” as metropolitan areas that have consistently positive population growth, providing demand for additional housing, and where local government regulation does not unduly constrain development. Housing markets with ... By Jenny Schuetz
Nearly a decade after the Great Recession, U.S. housing markets show signs of two very different problems. Metropolitan areas along the Northeast and West Coasts are building relatively little new housing and have seen sharp price ... https://www.brookings.edu/blog/the-avenue/2018/12/12/minneapolis-2040-the-most-wonderful-plan-of-the-year/Minneapolis 2040: The most wonderful plan of the yearhttp://webfeeds.brookings.edu/~/585182446/0/brookingsrss/topics/housingandmortgagemarkets~Minneapolis-The-most-wonderful-plan-of-the-year/
Wed, 12 Dec 2018 15:42:34 +0000https://www.brookings.edu/?p=552568

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By Jenny Schuetz

Perhaps proximity to the North Pole has its advantages. On December 7, Santa Claus (a.k.a. the Minneapolis City Council) delivered an early holiday gift to Twin Cities urbanists: several key zoning reforms, neatly packaged in an 1100-page comprehensive plan. YIMBYs around the country have been following the pitched battle over the plan’s most revolutionary feature: whether to allow small apartment buildings in neighborhoods currently zoned for only single-family homes. The approved plan would change the allowed residential uses on roughly half the city’s land. But, this is only one of several plan components for zoning reformers to applaud. In this piece, I discuss the strategies through which Minneapolis 2040 aims to improve housing affordability, and what the remaining challenges are toward implementing the plan.

We three goals of zoning reform

To help housing markets work more efficiently and equitably, zoning reform should facilitate three fundamental goals:

1. Build more housing

The only long-term way to reduce housing costs—or at least reduce the rate of housing price growth—is to build more housing. Many single-family neighborhoods claim that they are “built out,” meaning that no additional housing can be constructed—or at least, not under existing zoning. By rezoning lots that currently accommodate only one single-family house to allow duplexes and triplexes, Minneapolis effectively triples the housing capacity of some neighborhoods.

2. Build less expensive housing

Large houses cost more to buy or rent than small houses, conditional on structure quality and location. A 3,000 square foot structure divided into three apartments not only creates more housing units, but each apartment will be cheaper than the single-family house it replaces. Another plan component that helps to lower costs: the plan tackles the sacred cow of requiring developers to provide off-street parking for new houses (often a poison pill for low-cost housing).

3. Build less expensive housing in desirable neighborhoods

The biggest benefit to economic for low and moderate-income households comes from improving affordability in high amenity neighborhoods. Key features of those neighborhoods are proximity to employment centers, public transit stations, low crime, low poverty, and high quality public schools. Minneapolis 2040 puts access to high quality neighborhoods at the center of the plan.

More density is coming to town

Strategies to increase housing density have generally taken two different approaches. One approach substantially increases allowable density in near job centers or around transit stations, while maintaining low density in residential neighborhoods. Arlington, Va. and New York City successfully adopted this strategy, while California’s SB 50 (like last year’s SB 827) will attempt to do this statewide. The second approach allows incrementally more density across large swathes of land, for instance, by permitting accessory dwelling units (ADUs, sometimes called in-law apartments) in single-family neighborhoods. Cities such as Portland, Ore., Washington, D.C., and Vancouver, British Columbia have reduced barriers to ADUs, for incremental gains in housing density.

Adopting a new comprehensive plan is a pragmatic and symbolic step toward a more affordable and equitable housing market.

The Minneapolis 2040 plan pursues both substantial and incremental density increases. This is important, because the strategies are likely to produce different types of housing in different locations—and will benefit different types of households. Upzoning near jobs and transit tends to encourage development of large multifamily buildings with apartments designed for small families (e.g. studios, one, and two-bedroom units). Both location and housing characteristics attract households who prefer shorter commutes over large homes. By contrast, integrating duplexes and triplexes into low-density residential neighborhoods could create more opportunities for low and moderate-income families with children who prefer larger apartments and prioritize neighborhood safety and school quality.

Let them build, let them build, let them build

Adopting a new comprehensive plan is a pragmatic and symbolic step toward a more affordable and equitable housing market. But Minneapolis officials and housing advocates still need to navigate several potential hurdles.

The city must now revise its zoning code to align with the goals stated in the comprehensive plan. Details in zoning rules will affect the financial viability of developing higher density housing. For instance, low height limits and floor-to-area ratios could limit the ability to develop triplexes. (Again, removing off-street parking requirements is a huge victory in lowering development costs.)

Ultimately, how much new housing will be built—and whether that housing is smaller and cheaper than existing homes—depends on the financial returns of redevelopment to landowners. Less restrictive zoning is a necessary but not sufficient condition for building new high-density housing.

O Come, All Ye YIMBYs

Minneapolis 2040 caps a year filled with political energy around housing affordability. And it offers a relativelyrare example of success for the YIMBY agenda. As such, activists and leaders across the country should try to understand why pro-housing politics worked in Minneapolis, and how to translate it to other locations. Early observation suggests a few key elements.

Get the mayor on board.Mayor Jacob Frey has made housing affordability a signature issue, staking his political capital to revising the plan.

Compromise is not a dirty word. A key goal of the plan—and its most controversial element—was to introduce more diversity into single-family neighborhoods. Planners originally proposed allowing apartment buildings with up to four units, but compromised for triplexes in order to gain more political support.

Taking these lessons to heart, the YIMBY movement should add two 2019 New Year’s resolutions: effectively implement the Minneapolis 2040 plan and duplicate its successful political coalition in other cities.

]]>
By Jenny Schuetz
Perhaps proximity to the North Pole has its advantages. On December 7, Santa Claus (a.k.a. the Minneapolis City Council) delivered an early holiday gift to Twin Cities urbanists: several key zoning reforms, neatly packaged in an 1100-page comprehensive plan. YIMBYs around the country have been following the pitched battle over the plan’s most revolutionary feature: whether to allow small apartment buildings in neighborhoods currently zoned for only single-family homes. The approved plan would change the allowed residential uses on roughly half the city’s land. But, this is only one of several plan components for zoning reformers to applaud. In this piece, I discuss the strategies through which Minneapolis 2040 aims to improve housing affordability, and what the remaining challenges are toward implementing the plan.
We three goals of zoning reform
To help housing markets work more efficiently and equitably, zoning reform should facilitate three fundamental goals:
1. Build more housing
The only long-term way to reduce housing costs—or at least reduce the rate of housing price growth—is to build more housing. Many single-family neighborhoods claim that they are “built out,” meaning that no additional housing can be constructed—or at least, not under existing zoning. By rezoning lots that currently accommodate only one single-family house to allow duplexes and triplexes, Minneapolis effectively triples the housing capacity of some neighborhoods.
2. Build less expensive housing
Large houses cost more to buy or rent than small houses, conditional on structure quality and location. A 3,000 square foot structure divided into three apartments not only creates more housing units, but each apartment will be cheaper than the single-family house it replaces. Another plan component that helps to lower costs: the plan tackles the sacred cow of requiring developers to provide off-street parking for new houses (often a poison pill for low-cost housing).
3. Build less expensive housing in desirable neighborhoods
The biggest benefit to economic for low and moderate-income households comes from improving affordability in high amenity neighborhoods. Key features of those neighborhoods are proximity to employment centers, public transit stations, low crime, low poverty, and high quality public schools. Minneapolis 2040 puts access to high quality neighborhoods at the center of the plan.
More density is coming to town
Strategies to increase housing density have generally taken two different approaches. One approach substantially increases allowable density in near job centers or around transit stations, while maintaining low density in residential neighborhoods. Arlington, Va. and New York City successfully adopted this strategy, while California’s SB 50 (like last year’s SB 827) will attempt to do this statewide. The second approach allows incrementally more density across large swathes of land, for instance, by permitting accessory dwelling units (ADUs, sometimes called in-law apartments) in single-family neighborhoods. Cities such as Portland, Ore., Washington, D.C., and Vancouver, British Columbia have reduced barriers to ADUs, for incremental gains in housing density.
Adopting a new comprehensive plan is a pragmatic and symbolic step toward a more affordable and equitable housing market.
The Minneapolis 2040 plan pursues both substantial and incremental density increases. This is important, because the strategies are likely to produce different types of housing in different locations—and will benefit different types of households. Upzoning near jobs and transit tends to encourage development of large multifamily buildings with apartments designed for small families (e.g. studios, one, and two-bedroom units). Both location and housing characteristics attract households who prefer shorter commutes over large homes. By contrast, ... By Jenny Schuetz
Perhaps proximity to the North Pole has its advantages. On December 7, Santa Claus (a.k.a. the Minneapolis City Council) delivered an early holiday gift to Twin Cities urbanists: several key zoning reforms, neatly packaged in an ... https://www.brookings.edu/articles/how-americas-racist-past-cost-homeowners-156-billion/How America’s racist past cost homeowners $156 billionhttp://webfeeds.brookings.edu/~/584035262/0/brookingsrss/topics/housingandmortgagemarkets~How-Americas-racist-past-cost-homeowners-billion/
Thu, 06 Dec 2018 15:04:44 +0000https://www.brookings.edu/?post_type=article&p=551640

With the news of Amazon’s new headquarters in Northern Virginia, concerns arise around what rising real estate values will mean for current residents. Prior analyses have suggested that Amazon’s arrival will put additional stress on the region’s housing market, but that the metropolitan areacan accommodate the expected growth. In this article, we examine possible impacts on two neighborhoods closest to the National Landing headquarters in Northern Virginia—Arlington County and the City of Alexandria—which are likely to experience the largest direct effects. We focus particularly on economically vulnerable populations: low- to moderate-income renters who have few affordable options in the Washington, D.C. metro’s tight housing market. How resilient will current residents near National Landing be to rising rents?

Most National Landing residents can withstand rising rents

National Landing is a new name for the area around Amazon’s proposed campus, comprising part of several existing neighborhoods in southern Arlington County and the northern edge of Alexandria: Potomac Yards, Crystal City, and Pentagon City. About 24,000 people live within the six census tracts that make up National Landing.

Compared with the Washington, D.C. metro area overall, current residents of National Landing are highly educated and quite affluent (Figure 1). Nearly 90 percent have a bachelor’s degree or higher, compared to about 51 percent in the D.C. metro. Most of the affluent residents are young households without children, and have recently moved to the location. Renters occupy three-quarters of the housing in National Landing. Even before Amazon began its yearlong search, median rents in the neighborhood were relatively high compared to the D.C. metro area overall (around $2,000 per month in National Landing compared to just over $1,400 in the metro area, according to the most recent American Community Survey data). Because the current residents of Crystal City, Pentagon City, and Potomac Yards are economically well off, even if they face rent increases in the near future, they can probably afford decent quality housing in other desirable neighborhoods.

But National Landing is close to more economically vulnerable communities

The area immediately surrounding National Landing, known as Arlandria—a hybrid of the two jurisdictions’ names—is an ethnically and economically diverse community (Figure 2). The northern half of Arlington County is quite affluent. The neighborhoods around Metro’s Orange Line stations consist of expensive, high-rise apartments and condominiums. North of the Metro line towards the Fairfax County border are single-family neighborhoods served by some of the region’s best public schools. The southern half of the county, below U.S. Route 50 and where National Landing is located, has historically been more ethnically diverse and less affluent than North Arlington, with large Hispanic and Asian populations (Figure 3).

The City of Alexandria, which contains the southern tip of National Landing, is also economically and ethnically quite diverse, with a larger black population. Alexandria’s central Old Town neighborhood has an abundance of well preserved—and pricy—historic architecture. Alexandria’s northern and western neighborhoods, like South Arlington, have relatively large concentrations of “naturally occurring affordable housing”: older, garden-style apartments and small single-family homes that do not receive government subsidies but are nonetheless affordable to moderate- and lower-income families. Household incomes in Arlington and Alexandria vary substantially by race: black, Hispanic, and Asian families have significantly lower incomes than white families in both jurisdictions. Therefore, changes in the supply of affordable housing could have racially disparate impacts.

Figure 2 shows the share of housing units that rented for less than $1,500 per month in the most recent data. That is roughly the amount that a family earning 50 percent of the D.C. metro area’s median income could afford, if they spend 35 percent of their income on rent. These affordable neighborhoods and properties are likely to see rising rents—and possibly interest in redevelopment for higher-income tenant—as demand for real estate near National Landing grows. The residents of these neighborhoods—those with low to moderate incomes and lower levels of education, immigrants, and families with children—will face greater difficulty finding decent-quality housing that fits their budget.

As policymakers and business leaders in the greater Washington, D.C. region welcome the economic benefits from HQ2, they should also prioritize helping all residents share in those benefits. To maintain socioeconomic diversity, local governments across the region must plan for, and invest resources in, a diverse housing stock. There are three key prongs to a successful housing strategy:

Preserve existing affordability by acquiring below-market apartments. The substantial stock of unsubsidized, low-rent housing in both communities offers an opportunity for local governments and affordable housing developers to purchase properties, and put into place long-term affordability protections. This strategy is particularly appropriate in regions like Greater Washington, where developing new affordable housing is extremely expensive. Arlington’s Affordable Housing Investment Fund can leverage private capital to do this. The newly launched Washington Housing Initiative, a partnership between the Federal City Council and JBG Smith (the firm that owns much of Crystal City, now National Landing’s, commercial properties), aims to increase investment in affordable housing preservation.

Build more housing, more cheaply, in affluent neighborhoods. Moderate- and low-income neighborhoods in the Washington, D.C. metro area should not be expected to absorb all the demand for new, higher-cost housing. Over the past decade, affluent, mostly white neighborhoodsin the region have not built their fair share, even of market-rate housing. That needs to change.

Cooperate across jurisdictional boundaries. Amazon’s expansion will impact housing, labor markets, and transportation throughout the Greater Washington region. Local and state governments, corporate leaders, and nonprofit organizations need to move beyond lip service to regional cooperation, and commit to effective regional responses.

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https://www.brookings.edu/wp-content/uploads/2018/11/2018.11.28_metro_Schuetz_national-landing-affordability-related.jpg?w=258By Nicole Bateman, Jenny Schuetz, Martha Ross
With the news of Amazon’s new headquarters in Northern Virginia, concerns arise around what rising real estate values will mean for current residents. Prior analyses have suggested that Amazon’s arrival will put additional stress on the region’s housing market, but that the metropolitan area can accommodate the expected growth. In this article, we examine possible impacts on two neighborhoods closest to the National Landing headquarters in Northern Virginia—Arlington County and the City of Alexandria—which are likely to experience the largest direct effects. We focus particularly on economically vulnerable populations: low- to moderate-income renters who have few affordable options in the Washington, D.C. metro’s tight housing market. How resilient will current residents near National Landing be to rising rents?
Most National Landing residents can withstand rising rents
National Landing is a new name for the area around Amazon’s proposed campus, comprising part of several existing neighborhoods in southern Arlington County and the northern edge of Alexandria: Potomac Yards, Crystal City, and Pentagon City. About 24,000 people live within the six census tracts that make up National Landing.
Compared with the Washington, D.C. metro area overall, current residents of National Landing are highly educated and quite affluent (Figure 1). Nearly 90 percent have a bachelor’s degree or higher, compared to about 51 percent in the D.C. metro. Most of the affluent residents are young households without children, and have recently moved to the location. Renters occupy three-quarters of the housing in National Landing. Even before Amazon began its yearlong search, median rents in the neighborhood were relatively high compared to the D.C. metro area overall (around $2,000 per month in National Landing compared to just over $1,400 in the metro area, according to the most recent American Community Survey data). Because the current residents of Crystal City, Pentagon City, and Potomac Yards are economically well off, even if they face rent increases in the near future, they can probably afford decent quality housing in other desirable neighborhoods.
But National Landing is close to more economically vulnerable communities
The area immediately surrounding National Landing, known as Arlandria—a hybrid of the two jurisdictions’ names—is an ethnically and economically diverse community (Figure 2). The northern half of Arlington County is quite affluent. The neighborhoods around Metro’s Orange Line stations consist of expensive, high-rise apartments and condominiums. North of the Metro line towards the Fairfax County border are single-family neighborhoods served by some of the region’s best public schools. The southern half of the county, below U.S. Route 50 and where National Landing is located, has historically been more ethnically diverse and less affluent than North Arlington, with large Hispanic and Asian populations (Figure 3).
The City of Alexandria, which contains the southern tip of National Landing, is also economically and ethnically quite diverse, with a larger black population. Alexandria’s central Old Town neighborhood has an abundance of well preserved—and pricy—historic architecture. Alexandria’s northern and western neighborhoods, like South Arlington, have relatively large concentrations of “naturally occurring affordable housing”: older, garden-style apartments and small single-family homes that do not receive government subsidies but are nonetheless affordable to moderate- and lower-income families. Household incomes in Arlington and Alexandria vary substantially by race: black, Hispanic, and Asian families have significantly lower incomes than white families in both jurisdictions. Therefore, changes in the supply of affordable ... By Nicole Bateman, Jenny Schuetz, Martha Ross
With the news of Amazon’s new headquarters in Northern Virginia, concerns arise around what rising real estate values will mean for current residents. Prior analyses have suggested that ... https://www.brookings.edu/research/devaluation-of-assets-in-black-neighborhoods/The devaluation of assets in black neighborhoodshttp://webfeeds.brookings.edu/~/582430408/0/brookingsrss/topics/housingandmortgagemarkets~The-devaluation-of-assets-in-black-neighborhoods/
Tue, 27 Nov 2018 12:16:30 +0000https://www.brookings.edu/?post_type=research&p=549211

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By Andre M. Perry, Jonathan Rothwell, David Harshbarger

Homeownership lies at the heart of the American Dream, representing success, opportunity, and wealth. However, for many of its citizens, America deferred that dream. For much of the 20th century, the devaluing of black lives led to segregation and racist federal housing policy through redlining that shut out chances for black people to purchase homes and build wealth, making it more difficult to start and invest in businesses and afford college tuition. Still, homeownership remains a beacon of hope for all people to gain access to the middle class. Though homeownership rates vary considerably between whites and people of color, it’s typically the largest asset among all people who hold it.

If we can detect how much racism depletes wealth from black homeowners, we can begin to address bigotry principally by giving black homeowners and policymakers a target price for redress. Laws have changed, but the value of assets—buildings, schools, leadership, and land itself—are inextricably linked to the perceptions of black people. And those negative perceptions persist.

Through the prism of the real estate market and homeownership in black neighborhoods, this report attempts to address the question: What is the cost of racial bias? This report seeks to understand how much money majority-black communities are losing in the housing market stemming from racial bias, finding that owner-occupied homes in black neighborhoods are undervalued by $48,000 per home on average, amounting to $156 billion in cumulative losses.

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By Andre M. Perry, Jonathan Rothwell, David Harshbarger
Homeownership lies at the heart of the American Dream, representing success, opportunity, and wealth. However, for many of its citizens, America deferred that dream. For much of the 20th century, the devaluing of black lives led to segregation and racist federal housing policy through redlining that shut out chances for black people to purchase homes and build wealth, making it more difficult to start and invest in businesses and afford college tuition. Still, homeownership remains a beacon of hope for all people to gain access to the middle class. Though homeownership rates vary considerably between whites and people of color, it’s typically the largest asset among all people who hold it.
If we can detect how much racism depletes wealth from black homeowners, we can begin to address bigotry principally by giving black homeowners and policymakers a target price for redress. Laws have changed, but the value of assets—buildings, schools, leadership, and land itself—are inextricably linked to the perceptions of black people. And those negative perceptions persist.
Through the prism of the real estate market and homeownership in black neighborhoods, this report attempts to address the question: What is the cost of racial bias? This report seeks to understand how much money majority-black communities are losing in the housing market stemming from racial bias, finding that owner-occupied homes in black neighborhoods are undervalued by $48,000 per home on average, amounting to $156 billion in cumulative losses.
Interactive by Alec FriedhoffBy Andre M. Perry, Jonathan Rothwell, David Harshbarger
Homeownership lies at the heart of the American Dream, representing success, opportunity, and wealth. However, for many of its citizens, America deferred that dream.https://www.brookings.edu/articles/we-can-prepare-for-hq2s-arrival/We can prepare for HQ2’s arrivalhttp://webfeeds.brookings.edu/~/581476016/0/brookingsrss/topics/housingandmortgagemarkets~We-can-prepare-for-HQ%e2%80%99s-arrival/
Wed, 21 Nov 2018 14:17:48 +0000https://www.brookings.edu/?post_type=article&p=549133

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According to new research from the Brookings Metropolitan Policy Program and Gallup, in the average U.S. metropolitan area, homes in majority-black neighborhoods are valued at roughly half the homes in neighborhoods with no black residents, amounting to $156 billion in cumulative losses, lower levels of wealth accumulation among black homeowners, and reduced upward economic mobility for black children. The report, “The devaluation of assets in black neighborhoods: The case of residential property,” by Andre Perry, Jonathan Rothwell, and David Harshbarger, finds that this devaluation is caused by racial bias.

On Wednesday, December 5, the Brookings Metropolitan Policy Program and Gallup explored these findings as part of an event, Homeownership while black: Examining the devaluation of assets in black neighborhoods. Following a presentation on the research, two panel discussions discussed possible implications on advocacy efforts and policy reforms.

Following the panel discussions, speakers took questions from the audience.

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Washington, DCpast15440202001544027400America/New_YorkAccording to new research from the Brookings Metropolitan Policy Program and Gallup, in the average U.S. metropolitan area, homes in majority-black neighborhoods are valued at roughly half the homes in neighborhoods with no black residents, amounting to $156 billion in cumulative losses, lower levels of wealth accumulation among black homeowners, and reduced upward economic mobility for black children. The report, “The devaluation of assets in black neighborhoods: The case of residential property,” by Andre Perry, Jonathan Rothwell, and David Harshbarger, finds that this devaluation is caused by racial bias.
On Wednesday, December 5, the Brookings Metropolitan Policy Program and Gallup explored these findings as part of an event, Homeownership while black: Examining the devaluation of assets in black neighborhoods. Following a presentation on the research, two panel discussions discussed possible implications on advocacy efforts and policy reforms.
Following the panel discussions, speakers took questions from the audience.
According to new research from the Brookings Metropolitan Policy Program and Gallup, in the average U.S. metropolitan area, homes in majority-black neighborhoods are valued at roughly half the homes in neighborhoods with no black residents, ... https://www.brookings.edu/blog/the-avenue/2018/11/13/your-city-didnt-win-the-amazon-hq2-beauty-pageant-now-what/Your city didn’t win the Amazon HQ2 beauty pageant. Now what?http://webfeeds.brookings.edu/~/579985998/0/brookingsrss/topics/housingandmortgagemarkets~Your-city-didn%e2%80%99t-win-the-Amazon-HQ-beauty-pageant-Now-what/
Tue, 13 Nov 2018 16:11:47 +0000https://www.brookings.edu/?p=547726

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By Jenny Schuetz

Sure, it would have felt great to have Jeff Bezos crown you with the tiara and drape you in the sash. And yes, it’s galling to maintain that gracious fake smile while New York City and Northern Virginia bask in the audience’s admiration. Go ahead, have a little cry, maybe an extra scoop of gelato. When you get to the “what’s wrong with me, why didn’t he pick me?” stage of grief, here are some tips for moving forward productively (besides more gelato, which we strongly encourage).

Hit the books.

Smart is sexy. The best predictor of how well cities fare is their human capital: residents’ knowledge and skills. Upgrading the quality of local public education—from pre-K through community college—is probably the best investment you can make. Companies want to have well-qualified local workers available to fill a range of jobs—not just software engineers with advanced degrees. If Amazon plans to relocate some of its senior management to its second and third headquarters, those managers would like decent K-12 schools for their kids to attend. More education also produces more engaged citizens (known to mayors as “voters”).

Tone up your infrastructure.

A romantic suitor who truly loves you won’t care about those extra five pounds. But footloose companies, not unreasonably, are looking for host cities that have pothole-free streets, reliable transportation networks, well-maintained public parks, and fast Wi-Fi. And despite some notable deviations, maintaining urban infrastructure is mostly up to local governments. Not every city should try to replicate the New York City subway—but make sure residents throughout your city have affordable, predictable ways to reach major job centers, without spending half their day breathing in exhaust fumes (looking at you, Los Angeles). And if you do have a subway system, don’t skimp on maintenance for too long!

Be an honest, consistent, low-maintenance partner.

Local governments define the rules of the game for private businesses. What forms and procedures do companies have to follow to set up new firms? How can you convert an old warehouse into cool offices with open floor plans? Is there a city-specific living wage law or requirements for local hiring? How high are business taxes, sales taxes, commercial property taxes, and local income taxes? Some regulations clearly benefit the health and safety of workers, residents, and the environment. Taxes pay for public services that businesses and their employees want—like good schools, reliable transit, and clean parks. But don’t overdo the regulations, beyond demonstrable public benefits. Be transparent and even-handed in enforcing taxes and regulations. Local governments that aren’t perceived as honest brokers, or that unexpectedly flip their policy positions (see: Seattle head tax), are a huge turnoff to business owners.

Make sure your compassion goes beyond optics.

During the pageant interview, the audience gave you props for volunteer work knitting sweaters for abandoned Chihuahuas. But it takes sustained, thoughtful policies for your city to provide economic opportunity for all its residents. Pay attention to housing affordability, especially for middle- and lower-income families. Make sure public schools teach job-relevant skills, support summer jobs programs, and build pipelines to local employers. From a coldly calculating perspective, it’s hard to sell prospective employers on your city when homeless encampments are prominent features of downtown. As a compassionate mayor, you shouldn’t impose the costs of prosperity on your most vulnerable residents.

Working through this to-do list might improve your shot at getting the rose on next season’s “The Headquarters.” Equally importantly, providing high-quality public services will make your city a better place to live, work, and play for the people already there—established companies and aspiring entrepreneurs, not to mention the residents who pay your salary.

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By Jenny Schuetz
Sure, it would have felt great to have Jeff Bezos crown you with the tiara and drape you in the sash. And yes, it’s galling to maintain that gracious fake smile while New York City and Northern Virginia bask in the audience’s admiration. Go ahead, have a little cry, maybe an extra scoop of gelato. When you get to the “what’s wrong with me, why didn’t he pick me?” stage of grief, here are some tips for moving forward productively (besides more gelato, which we strongly encourage).
Hit the books.
Smart is sexy. The best predictor of how well cities fare is their human capital: residents’ knowledge and skills. Upgrading the quality of local public education—from pre-K through community college—is probably the best investment you can make. Companies want to have well-qualified local workers available to fill a range of jobs—not just software engineers with advanced degrees. If Amazon plans to relocate some of its senior management to its second and third headquarters, those managers would like decent K-12 schools for their kids to attend. More education also produces more engaged citizens (known to mayors as “voters”).
Tone up your infrastructure.
A romantic suitor who truly loves you won’t care about those extra five pounds. But footloose companies, not unreasonably, are looking for host cities that have pothole-free streets, reliable transportation networks, well-maintained public parks, and fast Wi-Fi. And despite some notable deviations, maintaining urban infrastructure is mostly up to local governments. Not every city should try to replicate the New York City subway—but make sure residents throughout your city have affordable, predictable ways to reach major job centers, without spending half their day breathing in exhaust fumes (looking at you, Los Angeles). And if you do have a subway system, don’t skimp on maintenance for too long!
Be an honest, consistent, low-maintenance partner.
Local governments define the rules of the game for private businesses. What forms and procedures do companies have to follow to set up new firms? How can you convert an old warehouse into cool offices with open floor plans? Is there a city-specific living wage law or requirements for local hiring? How high are business taxes, sales taxes, commercial property taxes, and local income taxes? Some regulations clearly benefit the health and safety of workers, residents, and the environment. Taxes pay for public services that businesses and their employees want—like good schools, reliable transit, and clean parks. But don’t overdo the regulations, beyond demonstrable public benefits. Be transparent and even-handed in enforcing taxes and regulations. Local governments that aren’t perceived as honest brokers, or that unexpectedly flip their policy positions (see: Seattle head tax), are a huge turnoff to business owners.
Make sure your compassion goes beyond optics.
During the pageant interview, the audience gave you props for volunteer work knitting sweaters for abandoned Chihuahuas. But it takes sustained, thoughtful policies for your city to provide economic opportunity for all its residents. Pay attention to housing affordability, especially for middle- and lower-income families. Make sure public schools teach job-relevant skills, support summer jobs programs, and build pipelines to local employers. From a coldly calculating perspective, it’s hard to sell prospective employers on your city when homeless encampments are prominent features of downtown. As a compassionate mayor, you shouldn’t impose the costs of prosperity on your most vulnerable residents.
Working through this to-do list might improve your shot at getting the rose on next season’s “The Headquarters.” Equally importantly, providing high-quality public services will make your city a better place ... By Jenny Schuetz
Sure, it would have felt great to have Jeff Bezos crown you with the tiara and drape you in the sash. And yes, it’s galling to maintain that gracious fake smile while New York City and Northern Virginia bask in the ... https://www.brookings.edu/blog/the-avenue/2018/11/06/amazons-real-estate-team-did-its-homework/Amazon’s real estate team did its homeworkhttp://webfeeds.brookings.edu/~/578747722/0/brookingsrss/topics/housingandmortgagemarkets~Amazon%e2%80%99s-real-estate-team-did-its-homework/
Tue, 06 Nov 2018 19:11:14 +0000https://www.brookings.edu/?p=546725

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By Jenny Schuetz

More than one year after Amazon announced its intention to establish a new headquarters outside of Seattle, the company appears poised to open two major offices in the New York and Washington, D.C. metro areas. The choice of metro areas likely reflects strong human, financial, and political capital in the New York and Washington, D.C. metro areas. The selection of neighborhoods within those metros—Long Island City in Queens, N.Y. and Crystal City in Arlington, Va.—shows considerable judgment by Amazon’s real estate team. As I’ve written before, both the New York and the District metro areas have high housing costs and tight supply. But within the metros, the two chosen neighborhoods have relatively flexible real estate markets, and some striking parallel features.

Think outside the CBD

Both Long Island City (LIC) and Crystal City are slightly outside the primary Central Business District (CBD) for their regions. LIC is on the western edge of Queens, less than three miles from Midtown Manhattan. Arlington County’s Crystal City is about 4.5 miles southwest of downtown Washington, D.C. Being a bit away from downtown offers some advantages for building a substantial new campus, notably less competition and lower rents for Class A office space. Both neighborhoods have multiple subway and/or bus lines that connect them to the CBD and residential neighborhoods. (One drawback to both metro areas: NYC’s subway and the District’s Metro are facing annoyed riders over deferred maintenance issues. Both regions will need to grapple with transportation infrastructure in any case; Amazon’s decision could provide the impetus to break toxic local politics.)

High-density zoning is Amazon’s friend, NIMBY residents are not

Amazon’s team no doubt spent hours poring over the local zoning rules of possible sites to determine whether they could build the type of high-density, vertical campus they have developed in Seattle. Just looking at New York’s and the District’s skylines, LIC and Crystal City stand out as taller than many adjacent neighborhoods. Both housing and office space in the District of Columbia are constrained by the city’s strict height limit, preponderance of low-density zoning, historic preservation, and opposition from neighboring residents. Much of Manhattan and Brooklyn have similar constraints from historic preservation and NIMBYism. Arlington County’s planning department has designated the Pentagon City-Crystal City neighborhood as a major planning corridor, and the entire area is zoned for high-density offices and apartments. Long Island City has an impressive inventory of newly built commercial and residential skyscrapers, ready for Amazon to move in. Both LIC and Crystal City are mixed-use neighborhoods, with relatively small residential populations.

Build HQ2 and hipster amenities will follow

From the initial announcement of the HQ2 search, commentators argued that local amenities—outdoor recreation, restaurants and bars, and some cultural edginess—would be important factors in location choice. While the NYC and the District metros offer plenty of amenities, it’s not obvious that LIC or Crystal City would crack the top fivehipster neighborhood rankings, partly because they’re so dominated by large commercial buildings. But they’re both close to high-amenity residential areas—Jackson Heights, Astoria, and Williamsburg in New York, Alexandria, Clarendon, and the Southwest Waterfront in Washington, D.C. And 25,000 new Amazon employees will surely draw microbreweries and pour-over coffee bars to their office environs before too long.

Following a year of uncertainty and drama, local sentiment among the host cities will likely be mixed: business and civic leaders eager for an economic adrenaline shot, some residents wary of higher housing costs and increased traffic congestion. Hopefully, policymakers in NYC and District metros will expand their housing supply and upgrade their transportation infrastructure to accommodate both Amazon and existing businesses and residents. Even HQ2 skeptics should breathe slightly easier with the announcement that Amazon has selected two relatively growth-friendly neighborhoods.

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By Jenny Schuetz
More than one year after Amazon announced its intention to establish a new headquarters outside of Seattle, the company appears poised to open two major offices in the New York and Washington, D.C. metro areas. The choice of metro areas likely reflects strong human, financial, and political capital in the New York and Washington, D.C. metro areas. The selection of neighborhoods within those metros—Long Island City in Queens, N.Y. and Crystal City in Arlington, Va.—shows considerable judgment by Amazon’s real estate team. As I’ve written before, both the New York and the District metro areas have high housing costs and tight supply. But within the metros, the two chosen neighborhoods have relatively flexible real estate markets, and some striking parallel features.
Think outside the CBD
Both Long Island City (LIC) and Crystal City are slightly outside the primary Central Business District (CBD) for their regions. LIC is on the western edge of Queens, less than three miles from Midtown Manhattan. Arlington County’s Crystal City is about 4.5 miles southwest of downtown Washington, D.C. Being a bit away from downtown offers some advantages for building a substantial new campus, notably less competition and lower rents for Class A office space. Both neighborhoods have multiple subway and/or bus lines that connect them to the CBD and residential neighborhoods. (One drawback to both metro areas: NYC’s subway and the District’s Metro are facing annoyed riders over deferred maintenance issues. Both regions will need to grapple with transportation infrastructure in any case; Amazon’s decision could provide the impetus to break toxic local politics.)
High-density zoning is Amazon’s friend, NIMBY residents are not
Amazon’s team no doubt spent hours poring over the local zoning rules of possible sites to determine whether they could build the type of high-density, vertical campus they have developed in Seattle. Just looking at New York’s and the District’s skylines, LIC and Crystal City stand out as taller than many adjacent neighborhoods. Both housing and office space in the District of Columbia are constrained by the city’s strict height limit, preponderance of low-density zoning, historic preservation, and opposition from neighboring residents. Much of Manhattan and Brooklyn have similar constraints from historic preservation and NIMBYism. Arlington County’s planning department has designated the Pentagon City-Crystal City neighborhood as a major planning corridor, and the entire area is zoned for high-density offices and apartments. Long Island City has an impressive inventory of newly built commercial and residential skyscrapers, ready for Amazon to move in. Both LIC and Crystal City are mixed-use neighborhoods, with relatively small residential populations.
Build HQ2 and hipster amenities will follow
From the initial announcement of the HQ2 search, commentators argued that local amenities—outdoor recreation, restaurants and bars, and some cultural edginess—would be important factors in location choice. While the NYC and the District metros offer plenty of amenities, it’s not obvious that LIC or Crystal City would crack the top five hipster neighborhood rankings, partly because they’re so dominated by large commercial buildings. But they’re both close to high-amenity residential areas—Jackson Heights, Astoria, and Williamsburg in New York, Alexandria, Clarendon, and the Southwest Waterfront in Washington, D.C. And 25,000 new Amazon employees will surely draw microbreweries and pour-over coffee bars to their office environs before too long.
Following a year of uncertainty and drama, local sentiment among the host cities will likely be mixed: business and civic leaders eager for an economic adrenaline shot, some residents wary of higher housing costs and ... By Jenny Schuetz
More than one year after Amazon announced its intention to establish a new headquarters outside of Seattle, the company appears poised to open two major offices in the New York and Washington, D.C. metro areas.